The four largest mortgage lenders in the United States were grilled on Capitol Hill on Thursday about the limited number of home loans they have modified for homeowners facing foreclosure.

My favorite quote was from Ohio Rep. Dennis Kucinich who asked David Lowman, chief executive of home lending at JPMorgan Chase & Co.: “I just wonder how hard you are really trying?”

From one Dennis to another… That’s my opinion too. The lenders are not trying hard enough and the “rules and guidelines” are ridiculous.

Follow this example of Mr & Mrs Homeowner who approach their lender, ABC Bank, to seek a loan modification.

MMH: “We would like to apply for a loan modification”

MMH: “What? If I had $90,000, I would not need a loan modification!”

Yes my friends, that is how loan modifications work. Or should I say… that’s why they don’t work.

In a federal report released last week, as few as 0.1 percent of mortgage modifications initiated under the new foreclosure prevention program involve reductions of principal.

In my opinion, until principal-balance-reductions become a required part of loan modifications, the nation will continue to hover around the embarrassingly low 6.0% completion rate of loans that are successfully modified.

As I see it, the only people that are able to get a loan modification today are those who are not seriously upside-down on their home or are struggling with an exceptionally high interest rate (above 10%).

Houston…we still have a problem!

Tough financial times are the breeding ground for those who prey on the misfortunes of others.

Check this out:

June 10 (Bloomberg) – Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.

Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.

The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth. The scams threaten to deepen losses for lenders that are increasingly agreeing to short sales as an alternative to more costly foreclosures.

“Short sales are an important tool that can help both the bank and the borrower,” said Morgan McCarty, executive vice president for mortgage servicing at Birmingham, Alabama-based Regions Bank, which lost money in the Connecticut case. “It’s just that criminals are always trying to find ways of profiting.”

A prevalent scam involves a practice called “flopping,” Barofsky said. In that scheme, investors or home buyers hire brokers to assess a home for less than its market value and convince banks to accept a sale at that level. The buyer conceals from the lender that he has lined up a higher offer and then quickly resells the property for a profit, as in the Connecticut case.

(There is a name for this — it’s called “FRAUD”).

CLICK HERE to read the entire article.

Unfortunately, there are signs of similar “shady” transactions right here in our home town.

At least that’s my opinion…

How long will it be before former home owners who walked away from their mortgages can buy again?

Here is what CNNMoney has to say…

Mortgage lenders are saying that in the future, losing a home because of illness or job loss will be seen differently than choosing to abandon a mortgage obligation for other reasons.

“If you made a strategic decision to default on paying your mortgage, it will work against you,” says Bill Merrell of the National Association of Review Appraisers and Mortgage Underwriters.

It will probably be seven or eight years before walkaways are able to buy another home, says Jay Brinkmann, chief economist for the Mortgage Bankers Association. “Credit scores are only one component of a complete credit decision,” he says. “[In these cases] credit scores are not a good indicator of their willingness to continue to pay their mortgage.”

I agree 100%.

Put yourself in the position of a lender. Would you give a loan to someone who walked away from their previous loan? I sure wouldn’t.

That is why short sales are a better option for troubled borrowers to consider. By attempting a short sale, you are agreeing to assist your lender in bringing a resolution to the defaulted loan sooner, rather than later.

Your lender will not forget. That’s my opinion…

Did you know…

• The average short sale takes 7 months to close AFTER the seller accepts the offer?
• Buying a home at “Trustee Sale” requires a FULL CASH PAYMENT in 24 hours?
• You can’t submit an offer to buy a resale home in AZ without a Loan Status Report?
• Many buyers of foreclosed homes spend $10,000+ getting the home back into livable condition AFTER they purchase the home?
• You can still buy a home with as little as 3% down payment?
• A buyer is entitled to a 10-day inspection period?
• A licensed REALTOR can help you navigate these situations!

Congratulations to two Agents with my company: Chris Prickett and Ron Jones.

Chris was the listing and selling agent on a recent short sale transaction where over $500,000.00 in mortgage debt was FORGIVEN by the lenders and the seller is no longer responsible for it. Ron was the transaction coordinator and assisted in the process by managing the paper flow and tracking the phone calls.

Short sales are a lot of work. That’s not just my opinion, it’s the opinion of every agent I know that is actively working short sales in 2010.

In the end, all parties involved (seller, buyer, sellers lender(s), listing agent, buyers agent, title company) must be flexible and communicative to successfully close a short sale.

Believe me, it requires a lot of tenacity from the listing agent to pursuade a lender to forgive certain types of mortgage debt!

If you are a possible candidate for a short sale, my company has several agents ready and available to help you. Lisa Jones, Chris Prickett, Ron Jones and Michelle Newstrom are all Certified Short Sale Negotiators.

*Note: Not all short sales are guaranteed to include mortgage debt forgiveness and the sellers credit scores are often affected negatively. We will explain how all of these factors apply to your specific situation.

Freddie Mac reports that the average interest for 30-year fixed mortgages was 5 percent this week, down from last week’s 5.06 percent.

Meanwhile, 15-year fixed loans averaged 4.36 percent versus 4.39 percent over that same time span. Rates on five-year, adjustable-rate mortgages and on one-year ARMs also were down, averaging 3.97 percent and 4.07 percent, respectively.

Time to buy? You betcha! At least that’s MY opinion.

In any given week I can expect to be asked: “So…how’s the market?” about 25 times.

Can you guess what the 2nd most popular question is??

“So…Why should I use a REALTOR? Why can’t I just sell my own house (or) go looking at homes on my own? What do REALTORS really do?” (OK… that was three questions, but if I get one I usually get all three).

The single most important response that I have to that question is: because REALTORS abide by The NATIONAL ASSOCIATION OF REALTORS® Code of Ethics.

What Does it Mean for You as a consumer? How does the Code of Ethics affect everyday real estate practices?

If a REALTOR® represents you, whether you are buying or selling a home, you can count on that REALTOR® to:

1. Be honest with all parties in the transaction – not just with you, but also with the other real estate practitioner and his or her clients. For example, if REALTORS® represent a buyer with a spotty credit history, they can’t be dishonest with sellers about this fact.
2. Put your interests ahead of his or her own, at all times. A REALTOR® makes every effort to understand the housing needs of his or her client, thoroughly researches available inventory, and shares all relevant information with the buyer so that he or she can make an informed decision. This service is provided regardless of the compensation available.
3. Disclose all pertinent facts regarding the property and the transaction to both buyer and seller. If a REALTOR® believes information provided by a seller is questionable, the REALTOR® is obligated to investigate. REALTORS® should recommend that buyers consult their own experts, such as home inspectors, to address concerns. For example, if a home seller asks his or her REALTOR® to conceal the fact that the roof leaks, the REALTOR® cannot comply; if the seller insists, the REALTOR® should end the business relationship with that seller.
4. Be truthful in all communications with the public. When REALTORS® distribute newsletters, create Web sites, or place advertisements, they must be careful not to represent other real estate professionals’ work product as their own. If recently sold or listed properties in the community are publicized, it must be clear whether the REALTOR® was actually involved in the transaction, or whether that data came from the local multiple listing service or other source. This ensures that the public understands the REALTOR®’s experience and can make an informed decision when choosing real estate representation.

PLEASE do not think that selling a home in today’s market without a REALTOR®. It’s not is as easy as putting a sign in your yard and waiting on the phone to ring. It’s so much more than that… and…

PLEASE do not try to buy a home in today’s real estate market without the representation of a REALTOR®. With all of the bank owned, REO and short sale properties out there… you need proper representation!

That’s my opinion (and I’m sticking to it!)

This just in…From The Wall Street Journal, Nick Timiraos (04/27/10):

States Craft Programs for Stressed Owners

Arizona, Florida, and Michigan have proposed using federal funds to pay down loan balances for struggling borrowers and to subsidize mortgage payments for those who remain out of work.

The plans are in response to a foreclosure-prevention effort championed by the White House, which allocated $1.5 billion for Arizona, California, Florida, Michigan, and Nevada. The Treasury Department is the reviewing proposals, which will be finalized next month.

HAFA (Home Affordable Foreclosure Alternatives), is a part of the Home Affordable Modification Program (HAMP) which aims to help homeowners who are unable to qualify for a loan modification by providing them with the option to pursue a short sale. Under the program, financial incentives are provided to both the lender and the borrow. The Treasury Department released HAFA guidelines on November 30, 2009, but participating lenders were not required to implement the program until April 5, 2010.

So here we are…3 weeks after the HAFA launch and many of you are asking me “How’s it Going?”

In my opinion…

1. Many lenders were prepared and the program looks like it will be a huge success for them.
2. Many other lenders have not even heard about the program. Or if they have, they have not trained their call centers and customer service departments on the details.

According to the program guidelines, once a borrower is determined to be ineligible for a loan modification (per the HAMP guidelines), the lender must consider that borrower for the HAFA program within 30 days. Every potential eligible borrower must be considered for the program before the borrower’s loan is referred to foreclosure. If the lender determines that the borrower is eligible, the short sale (or deed-in-lieu) process will begin.

Qualified borrowers will be given pre-approved short sale terms before the property is listed and once an offer is made the lender will have 10 days to approve or reject the sale.

To encourage HAFA participation, the Treasury Department raised financial incentives under the program in late March. Borrowers are now eligible for $3,000 in relocation assistance, and lenders will receive $1,500 to cover administrative and processing costs for a short sale or deed-in-lieu completed under the program.

In addition, investors will be paid as much as $2,000 for allowing a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders. To receive the incentive, subordinate lien holders must release their liens and waive all future claims against the borrower.

According to Treasury, the foreclosure alternative options offered under HAFA reduce the need for potentially lengthy and expensive foreclosure proceedings and also help preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration. In addition, Treasury said short sales and deeds-in-lieu generally provide a substantially better outcome that a foreclosure sale for borrowers, investors, and communities.

The mortgage problem is a big ship in an even bigger sea. Turning this thing around will not happen fast.

That’s my opinion.

Warren Buffett’s Berkshire Hathaway continues to look for opportunities in the beaten-down real estate sector.

Berkshire announced that one of it’s affiliate companies is purchasing Schiller Real Estate, which is described as the leading residential real estate firm in Elmhurst, Ill., a suburb of Chicago.

Schiller is being merged with Chicago-based Koenig & Strey Real Living, which they bought last fall. The combined operation will be the Chicago area’s third-largest. Terms of the transaction were not disclosed.

(Psst…Warren…give me a call – 602-909-2845. I might sell too if the price is right! On second thought… no.)

The purchases follow Buffett’s long-standing practice of buying into sectors that most people aren’t touching.

Buffett has said that the worst of the country’s housing problems should be over by the end of the year, and that builders should stop putting up new houses until the existing inventory clears. Clearly he sees an eventual turnaround in real estate prices and activity.

Well Warren, so do I. That’s my opinion and I am glad you agree!